Escobar v. Celebration Cruise Operator No. 14-11793 (11th Cir. June 25, 2015).
Jorge Escobar was an employee-seaman of Celebration Cruise Operator, Inc. He signed a written employment contract with Celebration that requires all disputes arising out of the contract be arbitrated in one of three foreign forums (in this case, the Bahamas which is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “Convention”)) under Bahamian law. Mr. Escobar sued in state court. Celebration removed the action to the United States District Court for the Southern District of Florida and moved for an order compelling arbitration and dismissing the Complaint in favor of arbitration. Mr. Escobar moved to remand. The district court compelled arbitration and denied the Motion for Remand and dismissed the Complaint with prejudice. Mr. Escobar appealed.
First, Escobar argued on appeal that his claims could not be arbitrated because, as a seaman, he is exempt from the Federal Arbitration Act (“FAA”) altogether. The court disagreed and found that the FAA’s seamen’s exemption does not apply to cases, like Escobar’s, governed by the Convention Act.
Second, Escobar asserted the arbitration clause in his employment contract was unenforceable because it called for his claims to be governed by Bahamian law. Mr. Escobar’s public-policy claim was based on the “effective-vindication doctrine.” The court agreed with Celebration and found that Escobar’s public-policy arguments based on the foreign choice-of-law clause was premature at the arbitration-enforcement stage.
Next, Escobar claimed the employment contract’s cost-splitting clause rendered the arbitration agreement “null and void.” That clause states that “[a]lthough [Celebration] shall bear the initial cost of the arbitration, each [party] shall be responsible for one half of the cost of arbitration.” He asserted that requiring him to pay for half the arbitration cost denies him access to the forum because he is indigent.
The court found the cost-splitting claim failed and held that the argument was premature at the arbitration-enforcement stage. Since Celebration agreed to pay the fees to start the arbitration proceedings, Escobar was not being denied access to the forum. Regardless, of the precise application of the cost-splitting clause, the court noted that it was an issue properly for the arbitrator to consider. The court concluded that Escobar failed to show he was being denied access to the forum, and the time for Escobar to raise any argument relating to the payment of fees would be at the award-enforcement stage, if and when Celebration attempts to collect arbitral costs from him.
Finally, Escobar claimed the claim was improperly removed from state court. But the court found that Escobar’s arguments ignored the express terms of the Convention Act which permit a defendant to remove a case relating to an arbitration agreement covered by the Convention.
Accordingly, the court held that the district court properly (1) granted Celebration’s Motion to Compel Arbitration and to Dismiss the Complaint and (2) denied Escobar’s Motion to Remand the case to state court.
The appeal was handled by Partner Michael Dono and the district court proceedings by Associate Gilda Chavez.